IR35 not a worry when providing services for foreign company?

[electronicfur]

Does anyone have experience of this and know whether I need to be concerned about the contract terms with respect to IR35 if I'm providing services for a foreign company?

From reading the below it makes me think the intermediaries legislation does not apply so I dont need to worry about it:

ESM3130 - Conditions of Liability - liability for NICs - client abroad

My company is being asked to provide software development & consultancy for a company in Switzerland. They dont have a UK office. They are in effect subcontracting, since they are supplying services to a client in Belgium, and the software my company will develop is part of services they supply for this client. I work from my own premises, but I'll need to go on-site to their Belgium client to do installation & integration work. The contract is for software development & consultancy for a certain number of mandays at a total price.

Cheers,
EF

[SueEllen]

If you are paying tax in the UK and using your limited company you need to be concerned about IR35.

In your case from what you describe you are covered.

[BlasterBates]

You seem to be clearly outside IR35, I wouldn´t worry about it.

[Ignis Fatuus]

I beg to diagree with SE and BB. ISTM that you may be at risk. From the linked ESM3130:

1:

The definition of “employed earner” is (...) “a person who is gainfully employed in Great Britain either under a contract of service (...).

2:

Only if the contract between the worker and client would result in the worker being an employed earner under this definition will the intermediaries legislation bite for NICs purposes.

3:

However, where the duties are to be performed abroad with an overseas client there are exceptions to this general rule, depending on where the client is based.

ISTM that you might be considered to fall under #1; and if so then #2 would apply and catch you in IR35; and that by your own admission the duties will not mainly be performed abroad, so you can not use #3 as a get-out.

[electronicfur]

ISTM that you might be considered to fall under #1; and if so then #2 would apply and catch you in IR35; and that by your own admission the duties will not mainly be performed abroad, so you can not use #3 as a get-out.

Well I was thinking that #2 would never apply, since the company I'm providing services to has no UK office, then I could only ever be viewed as an employed earner in Switzerland, so no NIC applies.

However it's all clear as mud to me, which is why I thought I'd ask.

Cheers,
EF

[jamesbrown]

Two things here. First, IR35 does not only apply to clients based in the UK, it applies to any clients. It is no less important to have your contract reviewed and working practices aligned when working for foreign clients. it may be more difficult for HMRC to prosecute a case, but that is incidental. Secondly, your contract and working conditions may or may not be outside of IR35. On the face of it, you'd be hard-pressed to have this sort of working arrangement fall inside, but it's nevertheless important to have the appropriate contract wording.

[jamesbrown]

I beg to diagree with SE and BB. ISTM that you may be at risk. From the linked ESM3130:

1:

2:

3:


ISTM that you might be considered to fall under #1; and if so then #2 would apply and catch you in IR35; and that by your own admission the duties will not mainly be performed abroad, so you can not use #3 as a get-out.

I think you're reading this wrong. I think it is a procedure for determining whether the legislation applies in principle, i.e. whether the intermediaries legislation applies for NIC purposes in principle (because the worker is or is not delivering the services and paying contributions abroad).

[Ignis Fatuus]

Well I was thinking that #2 would never apply, since the company I'm providing services to has no UK office, then I could only ever be viewed as an employed earner in Switzerland, so no NIC applies.

However it's all clear as mud to me, which is why I thought I'd ask.

Cheers,
EF

Who is "I"? On what basis are you providing the services?

If you do not pay somebody's NIC (Swiss or UK) on the income, both countries are going to want to know your justification for not doing so.

The Swiss justification for not paying Swiss social contributions would be that you continue to be resident in the UK, and pay UK NIC on your Swiss income.

The UK justification for not paying UK NIC would be either:
1. you are employed by a Swiss employer and pay Swiss social contributions on your Swiss income; or
2. the income is not employment income.
#2 is what IR35 is designed to decide.



Edit: jamesbrown, I agree with you. But I do suspect that if you are not paying NIC or equivalent abroad, then you will be tested on whether you are due to pay it here.

[BlasterBates]

The fact that you work on your own premises is a very clear indication. The fact that the "employer" isn´t even in the UK means that they wouldn´t even be obliged to respond to HMRC and I can´t see HMRC are going to bother going through the hurdles to contact them via a foreign tax authority. Since it would be difficult for them to gather evidence it´s highly unlikely they would want to check further than simply the contract. Worth just making sure the contract is compliant.

[The Spartan]

Just read through this thread and it's very interesting, would the outcome be any different if it was say a 3 month contract with the money paid to the UK Ltd company but the contractor commuting weekly to the office in Zurich?